The News: High-Yield Party
Debt capital markets bankers and private equity firms look to reap a bonanza from investors' powerful appetite for new high-yield bonds. That's one takeaway from last week's record-breaking $11.7 billion in high-yield bond sales.
We'd been wondered of late whether the huge 2009 recovery in corporate bond sales - both investment-grade and high-yield - would soon peter out after satiating what had been pent-up demand following the previous year's bond-market drought. Diminished bond trading last November and December and the gradual withdrawal of government-provided liquidity added two more reasons for caution.
Those concerns now appear premature. "It looks like risk is on the backburner again as investors are reaching for yield," Adam Cohen, co-founder of credit research firm Covenant Review, tells The Wall Street Journal. "And issuers are all too happy to oblige in meeting the insatiable demand."
The WSJ notes that some recent deals feature "boom-era characteristics," such as private-equity firms issuing debt to take cash out of the companies they bought.
High-yield business is setting records across the Atlantic too, the WSJ reported Monday. And unlike two previous bursts of speculative bond issuance in the late 1990s and 2004-06, a diverse mix of companies are borrowing this time around. That augurs well for the move's sustainability, according to the WSJ.
Yield Junkies Return to Bond Market [WSJ]
Stars Align for Europe's High-Yield Market [WSJ]
Goldman Delays Bonus Decision: Source [Reuters]
RBC Names New U.S. Investment Banking Chief To Boost Market Share [Financial News]
Citigroup Reports a $1.6 Billion Loss for Year [NY Times]
Citi Loses $7.6 Billion On TARP Repayment And $8.18 Billion Set Aside For Soured Loans [ClusterStock]
AIG Tries to Defuse Bonus Pay Showdown [WSJ]